Focus: StrongGolden Leaf Holdings is a Canadian company operating in Oregon, Nevada and Canada, with cultivation, production and retail operations built around recognized brands. It produces flower, oils and edibles and distributes through its Chalice Farms retail dispensaries, as well as through third party dispensaries.

Markets: StrongPrimary: Oregon, Nevada, Canada
Secondary: California, other states that become legal

Operations:Cultivation: NeutralCurrent production: We estimate 6,500 kgs per year (In Canada, 217 kgs per year. In Nevada, 217 kgs per year. Tahoe, which it recently bought, produces roughly 6,000 kgs per year. It also currently buys wholesale to fulfill orders.)
Future production: It is building a facility in Portland OR.

Distribution: StrongDirect sales:
-It has 7 retail dispensaries in OR, 6 under Chalice Farms name. Has agreed to buy a dispensary in Northern CA.
-signed an LOI with BlackShire Capital, a Canadian private equity firm, to launch the Chalice Farms franchise model.
Store networks:
Its branded products are sold in over half of the dispensaries in Oregon, as well as several dispensaries in Nevada. It is also preparing to sell selected products in Canada ahead of legalization in Oct 2018.

Branding: StrongBased on a review of their product packaging and website, we think Golden Leaf has excellent branding capabilities. They also just hired a Chief Marketing officer with 30 years of creative e branding experience..

Risks:Cannabis is becoming a commodity in some places. Many companies continue to enter the market creating oversupply and downward price pressure. The company’s only supplier of distillates in Oregon also supplies for many other brands, representing a concentration of risk. This risk may decrease when Golden Leaf’s production license in Portland is approved.

Recommendation: Neutral

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Risk of Prosecution for Marijuana-Related Companies. If you are considering investing in a company that is connected to the marijuana industry, be aware that marijuana-related companies may be at risk of federal, and perhaps state, criminal prosecution. The Department of Treasury recently issued guidance noting: “[T]he Controlled Substances Act (“CSA”) makes it illegal under federal law to manufacture, distribute, or dispense marijuana. Many states impose and enforce similar prohibitions. Notwithstanding the federal ban, as of the date of this guidance, 20 states and the District of Columbia have legalized certain marijuana-related activity.”